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Since 2008 – Progress Through Politics

Did U.S. just implement more severe austerity measures than Great Britain? A quick response

Sorry this diary is so brief. But sometimes the truth is simple.

A rec listed diary on DKos asks Did U.S. just implement more severe austerity measures than Great Britain, Spain?. There’s a simple answer to this…


If you want a taste of what real neoliberal austerity feels like, come to Britain. Today the Guardian reported

A shock fall in activity in Britain’s services sector at the end of last year has put the economy on the road to a triple-dip recession, as economists predict the UK will be stripped of its triple-A credit rating.

The services sector – which accounts for three-quarters of Britain’s economic output – shrank for the first time in two years in December, suggesting the UK economy contracted in the fourth quarter. If output drops again over the next three months, the UK will fall into its third recession in five years – an unprecedented triple dip.

The Labour Government responded to the financial crisis of 2008 with a stimulus package, much like that put together by the incoming Obama administration in early 2009. Growth resumed. But then the Conservative Lib Dem Coalition was formed in the wake of the inconclusive 2010 election, and put forward a radical package of cuts which enforced a massive shrinkage of public sector investment, benefits, and procurement just at the worst moment, in Keynesian terms.

Back in the UK, we’re relearning the hard way the lessons of the 1930s – that you don’t deleverage public sector spending when private deleveraging is so high. We’ve relearned the paradox of thrift on a massive scale, as the government, in an attempt to cut public spending, has miscalculated the multiplier effect, which in turn has forced them to borrow more.

Let’s call it failure

John Lanchester looks at the nation’s finances

Saying ‘I told you so’ is supposed to be near unbeatable fun, so it’s disappointing to report that, in the case of the government’s handling of the British economy, speaking for myself, no fun is being had. As George Osborne’s autumn statement made clear, the scale and speed and completeness with which things are going wrong are numbing. The Tories went into the 2010 election with a manifesto commitment to reduce the structural deficit – the amount by which the government’s spending in any given year exceeds its income, excluding temporary effects from the downturn. The first point in their economic policy read as follows: ‘We will safeguard Britain’s credit rating with a credible plan to eliminate a large part of the structural deficit over a Parliament.’ How? It’s on the next page: ‘We will cut government spending to bring the deficit down and restore stability.’

That’s what they set out to do. In June 2010, in his first budget, Osborne said the structural deficit was 4.8 per cent, and that with three years of reduced spending, the figure would be down to 1.9 per cent. So how’s that going? Well, by the end of those three years, after £59 billion of tax rises and spending cuts, the figure is set to be….  4.9 per cent – higher than it was when the coalition came to power. Osborne’s single biggest economic ambition was to get the deficit down, but he hasn’t managed it, and has had to abandon his noisily announced target to get rid of most of the deficit in a single parliament. Gather round, children, and take a good look. This is the thing we call failure.

Just FYI


  1. fogiv

    I didn’t even have to look to see who’s diary it was.

    Did Obama get just about the best deal possible under the circumstances or ARE WE ALL ABOUT TO FRIGGIN’ DIEZ FROM CONSUMMIN’ CATFOOD POISONED WIFF UTTER BEETRAYUL?!?!!!?1!!?


  2. Noor B

    You make a really good point.  We haven’t had real austerity here yet.  That does not mean we do not need to be vigilant here in the US — any trial balloon that goes up suggesting we do something stoopit to our safety net will need an immediate “HELL NO!!!” response.

    That said, we’re not completely safe.  The 113th Congress may have one safe, reasonably sane chamber, and then there’s the other one.  I think we can all expect that the House Republicans will do their dead-level best to undermine agencies that provide a floor.  Witness what happened to the Sandy relief bill.  

    There is a diary on GOS that outlined what is on the table in sequestration and what is not.  “The Left’s Sequester Leverage” is a thoughtful piece outlining what is believed to be safe from the austerity posse.  That said, I think it behooves Americans to keep their eyes on this fight, because there are too many in the Republican caucus who would like nothing better than to weasel out of any prior agreements.

    OTOH, for a lot of us, we don’t need official austerity because we’ve been driven to impose our own mini-austerities by the weak economy.  I live in Maryland, a state that on the whole is doing very well.  But I do not live in the DC-Baltimore corridor.  My part of the state is not recovering yet.  We’re usually at least a year behind the rest of the state.  Wages haven’t kept pace with inflation for several years, yet the cost of everything is going up.  Every month is a juggling act that becomes ever more painful and frightening.

    And yet, we are not Greece, and I thank Dog for that not-so-small mercy.

  3. bubbanomics

    I understand it in the us, the home of Galts Gulch. I don’t understand it in Europe, where I imagine a general mistrust of markets. For fsm sake in Germany unions typically have board of directors representation in corporate governance. How does austerity happen in theUK? Y’all cant be crazy as us?

  4. louisprandtl

    We elected Obama and Brit elected David Cameron. Brit loves his monarchy as does our media channels.  Juke is  popular SUV here. Brit needs a chauffer to  drive around.

  5. SallyCat

    for lack of trying by the House of idiots.  What is distressing is watching the various states that are trying to implement their own versions. Texas cutting Planned Parenthood funds and the court agreeing to it, Wisconsin with Union busting bills, Michigan with Emergency Managers.

    I worry that piece by piece laws will dismantle local safety nets and people will not fight back hard enough. Trying to figure out how to get an active coalition together to fight the individual austerity before it goes national. Just some early morning coffee musings.

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